Seven reasons to expect a slow-growth U.S. economy ahead
Is the United States headed for a "new normal" -- a slow-growth economy that lasts perhaps for as long as a decade? The evidence supporting the "new normal" argument, predicting a future in which the U.S. GDP grows at no more than 2.0% to 2.5% per year, is compelling. That low growth rate would constrain corporate revenue and earnings growth, and stock prices, among other consequences.The U.S. has already registered below-trend GDP growth at this recovery's start – just 3.5% in Q3, as opposed to the more than 6% GDP growth typically registered in an expansion's initial stage. Here's why the slow-growth conditions might continue:
FDIC Chair Sheila Bair has it right: It's time to change bankers' incentives
I have to hand it to FDIC Chairwoman Sheila Bair -- the former UMass economics professor gets it right on key policy issues. She is right about ending the doctrine of too-big-to-fail, and now she is proposing an idea that I've been pushing with no effect for years. That idea is to align the interests of the banks that bundle assets and sell them as securities -- so-called asset-backed securities -- with those of ABS investors.
Before getting into the details of her proposal, I should disclose that I am not entirely objective in analyzing it. I worked with the FDIC back in the early 1980s to help build a system to manage the liquidation of the assets the FDIC gets when it helps find partners to absorb failed banks. And I have posted repeatedly about the idea of putting bankers' pay in escrow as a way to align the interests of those who create investments with those who buy them.
Now entering Tiburon. Please get your license plates ready for their close-up
If you're a thief with a car, you may want to steer clear of Tiburon, California. As tantalizing a target as Tiburon may be -- its median home price is $2.62 million, and Forbes ranks it as the 26th wealthiest Zip Code -- the Bay Area enclave may become the first U.S. city to install cameras to photograph the license plates of every car that enters and leaves town."I think it makes the community safe," Michael Cronin, Tiburon's police chief, said Wednesday, after the Town Council voted 4-0 to go ahead with the surveillance program, slated to go live within six months, according to the San Francisco Chronicle. But the exclusive waterfront hamlet 17 miles north of San Francisco could set a dangerous precedent, privacy experts warn.
eBay search function fails for hours
Firsthand reports from 24/7 Wall St. and social media information website Mashable say the the search function of eBay (EBAY) was down for several hours on Saturday. The search feature is critical to aiding shoppers in finding products, and navigating eBay without it is extremely difficult.
The eBay problem is another example of how server issues, software problems or attacks on a company's website by hackers can compromise or shut down a service. It is not clear what happened at eBay during the hours that its search feature was disabled, but as the holidays approach, what is clear is that an interruption of the service could cost the company -- and the firms that use its auction system to sell their products -- tens of millions of dollars.
Traveling abroad for better returns
While there's no place like home, sometimes you have to get out of your own backyard -- and that includes investing. Impressive growth in emerging economies such as China and India will boost investments that provide exposure to these markets, says the new Emerging Wealth report from consultancy Watson Wyatt. "We believe that emerging market economies will continue to grow strongly, due to a mix of rising productivity, economic and financial reforms and favorable demographics," says Craig Mercer, Watson Wyatt's senior investment consultant, in a prepared statement.
But investors who want to globalize their portfolios should also remember that with the aggressive returns some of these markets can offer come risks, including currency fluctuations and political instability. That said, investors can get in on the international action through index funds or other broad investments that can reduce the chance of any major downside. So what's all the excitement about in emerging markets? Watson Wyatt highlights a few possibilities, including the ongoing shift in focus from agriculture to industry and services in many countries, as well as the growth in labor forces.
Child care issues are an impossible challenge for Army moms and dads
On November 6, Specialist Alexis Hutchinson was arrested. Hutchinson, 21, had arrived back on her military base in Savannah, Georgia, just a week earlier with her 10-month-old son, Kamani, in tow. This was not a happy trip. She'd been home in Oakland, California, on leave, where her mother, Angelique Hughes, broke the bad news: it wasn't working out.Kamani's dad isn't involved in the child's life, and Hughes had agreed to keep the baby for a year while Hutchinson joined her unit, headed toward Afghanistan. But Hughes is already caring for an ailing mother and sister, a special-needs daughter, and up to 14 children during the day in an in-home daycare. Kamani was one responsibility too many.
Democrats' health reform moves ahead after Harry Reid snares 60 votes
Democratic leaders secured the last two votes to move ahead on historic health care legislation, clearing the way for a Saturday night showdown on President Barack Obama's top domestic initiative. In long-awaited speeches, centrist Sens. Blanche Lincoln of Arkansas and Mary Landrieu of Louisiana said they would stand with their party and vote "yes" on the crucial test vote despite deep reservations with elements of the 2,074-page bill to remake the nation's health care system."The truth is this issue is very complex. There is no easy fix and it's imperative that we build on what's already working in health care in America," Lincoln told her Senate colleagues. Hours earlier, Landrieu had delivered her news. The two represent votes 59 and 60 for Senate Majority Leader Harry Reid, D-Nev. (pictured), who needs that many in the 100-member Senate to go forward. The Senate's 40 Republicans are unanimously opposed.
In movie theaters everywhere: 'Attack of the Artery-Clogging Popcorn'
The biggest horror show in movie theaters right now is not on screens but in the tubs of popcorn resting in audience members' laps, if you ask one consumer advocate. Snacking on a medium popcorn and soda at one of Regal Entertainment Group's (RGC) cinemas is the nutritional equivalent of eating three McDonald's (MCD) Quarter Pounders slathered with 12 pats of butter, says the Center for Science in the Public Interest.The twist in the plot? Both Regal and AMC -- the nation's No. 1 and No. 2 theater chains -- understate the calories in their popcorn servings by big amounts, according to laboratory analyses commissioned by the nonprofit. Regal, for example, indicates its medium popcorn is 720 calories, while its large is 960 calories, the center says. But both medium and large sizes end up containing about 1,200 calories, the Washington, D.C. outfit says. And because the kernels are popped in coconut oil, they contain 60 grams of saturated fat -- three times the daily recommended allowance, the group adds. "You might think you're getting Bambi, but you're really getting Godzilla," says Jayne Hurley, the center's senior nutritionist.
CEO's Corner: Prudential's Christine Marcks says no need to retire the 401(k)
If you've checked the balance on your 401(k) lately, you're likely breathing a mini sign of relief as the Dow's bounce back above 10,000 helps replenish some losses suffered during the recession.But as stocks remain volatile and the recession hampers retirement planning for millions, we sought advice from Christine Marcks, CEO of Prudential Retirement, the retirement arm of financial services giant Prudential Financial.
In our conversation, Marcks outlines a game plan for laid off workers and describes new tools available for today's pre-retirees. Despite what some published reports say, the 401(k) is still very relevant, Marcks adds.
Why is Oprah going to cable? Hint: It's nothing to get teary about
Oprah Winfrey is a smart cookie. I am guessing she knows all too well that you can make more money in cable than you can on a TV network. If it's like other cable networks, her new Oprah Winfrey Network (OWN), which she co-owns with Discovery Communications (DISCA), will be much more profitable than the TV networks.
And her departure from her popular show will cost those TV networks big money. How much? Show broadcaster, Walt Disney's (DIS) ABC, will lose millions in ad revenues, according to the New York Times. CBS Corp. (CBS), which owns Oprah's syndication rights, will similarly lose millions.
Why is Oprah going to cable? Hint: It's nothing to get teary about
Kisses from Hershey: Candymaker may court Cadbury with $17 billion bid
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health reform bill?
